Zara Analysis - Research Paper Example

Inditex’s portfolio includes eight retail brands including Massimo Dutti, Bershka, Zara, Zara Home, Oysho, Uterque, Stradivarius and Pull & Bear. Although each of these brands pertains to retail textile and distribution, for Inditex each one represents a different strategic business unit. The flagship brand however, is Zara. According to Reuters, Zara’s owner Inditex reported 32% increase in profit in the first half of the year 2012, sales worth of 7.2 billion Euros and EBITDA of 1.6 billion as compared to forecasts of 7.

1 billion and 1.6 billion respectively. The percentage of operating expenses from sales reduced to 37.16 percent as opposed to 38.04% last year, this indicates that there is a higher percentage of revenue keeping other factors same. According to BBC website, the net sales have risen by 17% to 7.2 billion Euros. The opening of new stores by 2012 has also increased by 7%, thus now Inditex has 5,693 stores in 85 countries (www.bbc.co.uk). The company has also invested extensively in their home market of Spain, with the hopes of upgrading the commercial and logistic activities to boost their world-wide operations.

Since Zara has presence in more than 85 countries of the world, the brand needs to adapt to the political environment of the country they are operating in. For France is particular Zara needs to consider the following aspects of the macro environment: The European financial crisis and the fluctuating value of the Euro have a strong impact on fashion apparel retailers. However as opposed to high-end French fashion brands, Zara is a medium tier brand. So the fashion-conscious target audience has also become price sensitive, this works in favor of Zara France is one of the best developed economies in the world.

Thus the women in France are very internet savvy, so Zara needs to utilize the vast possibilities of online retailing as well. According to Annual Report 2011, social media and